Jordan Energy

Egypt’s recent decision to halt gas supplies to Jordan and the kingdom’s subsequent decision to lift fuel subsidies has placed the country’s already difficult energy situation under an added level of stress. However, the decisions also highlight the need for Jordan to create its own alternative forms of energy import and production, a process that is already under way.

The kingdom’s current economic model is highly integrated with its ability to trade with its neighbours, a model that, thus far, appears to be working well. Despite less than favourable economic headwinds, the World Economic Forum’s (WEF’s) “Global Competiveness Report” for 2012-13, ranked Jordan 64th out of 144 countries surveyed, rising seven places over the previous year.

The early August approval of a $2bn loan by the IMF to Jordan has once again brought the Kingdom’s financial concerns into the spotlight. However, the IMF was quick to point out most of the problems the economy faces come from external factors, and in particular the country’s reliance on foreign sources of energy, which is why much of the IMF’s money will be used to support a number of energy projects well under way.

With a growing population and increasing demands on scarce natural resources, Jordan is hoping that a major desalination project will be instrumental in helping the Kingdom tackle its water shortages.

2012 began with a particularly hefty reckoning for Jordan when the government received the largest energy bill in the Kingdom’s history: JD2.75bn ($3.87bn). Jordan relies heavily on imports for its energy needs – some 98% – and in 2011, energy amounted to 26% of total Jordanian imports. Yet cooperation with other regional states may hold the answer to the Kingdom’s current energy supply challenge.

Jordan’s massive stores of oil shale have been the topic of much discussion lately, with investors keen to help the kingdom harvest the energy locked in the layers of rock underfoot.